Many of our MIPS followers (including me) are asking if we will see new highs on the S&P 500 in the near future. We believe there is a good chance of that happening, but we are at a very critial point now.
As you can see in the graph below, the SPY broke through the top of an obvious double bottom at 195.0 (SP500 1950) in early March 2016, and then climbed rapidly to the bottom of the 12-month flat channel from 2015 at 204.0 (SP500 2040). The "area" between SPY 204.0 and 214.0 is what we have been calling "No Man's Land". The SPY broke through 204.0 with force (orange elispe), and has "stagnated" close to there for the last 3 trading days. It is very bullish that the SPY has been able to close above 204.0 every day after either opening or dropping below 204.0 intraday. Good "bounce-backs" for the bulls !!![Looks like someone hanging on to the top of a fence for their life, and it may be so for some of their investing lives.]
It will be very difficult for the bulls to push the SPY all of the way through "no man's land", up to strong resistance levels at 212.0 and 214.0 (SP500 2120 and 2140). The SPY all time high is at 213.5 (SP500 2135). And, of course, it will be even harder for the bulls to push the SPY through that level. Even if that does happen, none of this is really good for us unless the SPY keeps going up from there or we get out before the fall back. Read on...
Alternate:
If the bulls cannot push through SPY 213.5, we may be back to the topping process and the possibility of a big drop from near the all-time high. See below.
We will wait for MIPS to tell us how to trade this market...
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